Leading three Australian banks are forming a new company referred Lygon to digitize bank guarantees employing the blockchain technology.
Bank guarantees are a legal contract between a debtor and a financial organization. It ensures the debtor and therefore the debt provider that the debt is going to be paid on time under all circumstances.
Australia along with the New Zealand Banking Group Limited, Commonwealth Bank of Australia & Westpac Banking Corporation alongside two other shareholders – the Australian shopping center company Scentre Group and technology behemoth IBM – are forming the company after a successful pilot last year.
In line with a recent official report by the ‘Financial Review’, the last of Australia’s leading three banks, National Australia Bank, also tested the blockchain technology last year but pulled out of the project within the wake of the continued COVID-19 outbreak.
As per Lygon chairman, Nigel Dobson, Lygon’s primary focus is to digitize commercial lease guarantees to save lots of commercial landlords the time and costs involved in the operational processes while also ensuring the security of small businesses within the short term.
Bank guarantees today are totally paper-based and even might take several weeks to organize and deliver. The 5 entities backing Lygon aim to use IBM’s Hyperledger technology to digitize bank guarantees and make issuance a one-day process. The firm is planned for a launch date within this month later in September.
While explaining further Dobson added, “It involves market at a time when some people are questioning the worth of blockchain but what makes this work for us, and our users, is that it solves a very big problem.”